The Story Of Patent Reform: How Lobbyists & Congress Works... And How The Public & Innovation Get Screwed

from the sad dept

We've noted how there's suddenly been a lot of mainstream interest in the massive problems of the patent system, thanks in part to mainstream media operations like This American Life doing stories that expose just how damaging the patent system is today. And yet, despite all of this, we've been pointing out for a while that the patent reform bill making its way through Congress is useless. It does nothing to address the problems of the system and has a few things that will make matters worse. And it bizarrely includes clear favors to Wall St., protecting them from a few bad patents, while leaving everyone else -- including Silicon Valley -- to fend for themselves.

So why isn't Congress actually fixing the patent system?

Zach Carter over at the Huffington Post has an absolutely fantastic detailed look at the politics and corruption behind the patent reform bill. It's long, but worth reading. However, the tl;dr version is: patent reform is entirely about lobbyists and special interests. No one -- and I do mean no one -- appears to have any concern whatsoever for the actual impact of the patent system or patent reform on actual innovation. The story is about as depressing as you would imagine, but is a great primer on the nature of regulatory capture and how certain industries influence regulations, while the actual public and the people most impacted by the legislation is left out. Here's just a snippet:

DataTreasury's lawsuits are handled by Texas trial-law kingpins Nix, Patterson & Roach. In the 2010 elections, the firm was the third-largest contributor to the Democratic National Committee, pouring in $179,000, behind only Google and the Law Offices of Peter G. Angelos, according to the Center for Responsive Politics. When Republican lawmakers bemoan "Democrats and trial lawyers," they're talking about Nix Patterson and a handful of other big law firms.

Nix Patterson brought in an even bigger fundraising champion to lobby Democrats for DataTreasury: Ben Barnes. He and his wife Melanie have dumped $379,000 of their own money into politics over the years, according to Center for Responsive Politics data, with every penny going to Democrats. Barnes is also one of the most influential fundraising bundlers in politics. In the first half of 2009 alone, he pulled together $630,450 for the Democratic Congressional Campaign Committee -- more than anyone else, according to the Sunlight Foundation.

Barnes is not a man congressional Democrats keep waiting. And he's previously worked directly with Pelosi, who attended a fundraiser at Barnes' Austin home in 2009. Pelosi's office did not respond to inquiries on her meetings with the fundraising giant, but when asked by HuffPost whether he had won over Pelosi on Section 18, Barnes said that he had.

"Oh, yeah," Barnes told HuffPost. "For some time I've worked with DataTreasury that has the patent all the banks are worked up about."

By revolting on the patent bill, Pelosi was throwing in her lot with Reps. Maxine Waters (D-Calif.), Dan Boren (D-Okla.), Aaron Schock (R-Ill.) and Jim Sensenbrenner (R-Wis.), who circulated a letter on June 15 urging their colleagues to oppose Section 18, saying the language "carves out a special niche" for Wall Street that would "stifle innovation."

This odd bipartisan coalition was going up against the entire New York delegation, led by Rep. Joseph Crowley (D-N.Y.), chairman of the corporate-friendly New Democrat caucus, who declined to comment for this story. As the behind-the-scenes struggle intensified, DataTreasury promoted the idea that Section 18 was a covert bailout for the banks. If courts ruled that the new law amounted to an unconstitutional taking of property -- a very big 'if' -- then taxpayers would ultimately have to pay back the bank winnings resulting from the bill.

Nobody comes out of this story looking good. Everyone comes out of it looking corrupt. And all of us suffer. Though a few lawyers are making out like bandits.

They'll figure it out

Re: They'll figure it out

It already has. 12 years of state based baby sitting as opposed to education, a union based education system, Lowest common denominator testing, and regulations saying you can not call people stupid, have all contributed to the mental downfall of the US population.

Re: Re: They'll figure it out

It already has. 12 years of state based baby sitting as opposed to education, a union based education system, Lowest common denominator testing, and regulations saying you can not call people stupid, have all contributed to the mental downfall of the US population.

You forgot the abolition of slavery. That's when all this federal meddling really picked up.

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Just the usual stuff. Quoting it off the Huffington Post gives it a whiff of crediblity, but since this guy is anti-media, anti-government, and appears to have an axe to grind, I don't give it much crediblity.

As always, if you start with your conclusion, you can almost always write your way back to the intro and make it look credible. But the piece is pretty one sided, don't you think?

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So basically, you're dismissing someone's argument because, you are against their political spin?

Sorry, I'm not following your argument. If he's anti-big-media as you entail, why post about the political coalition of both Democrats and Republicans that makes this regulatory capture possible?

If he's anti-government, why criticize the fact that our government is indeed flawed where they "work together" (as the Democratic byline seems to be right now) with all parties to pass laws?

And if he has an axe to grind, why grind it by showing the flaws of the patent system that a number of people that aren't supposedly "anti-media", "anti-government", (such as Google) instead of going true rebel and asking the populace to rise up?

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Jay, to get to his conclusion, you first have to assume that there is nothing good about patents. Now, I know that is a popular version of the truth around here, but one that has never been proven (because nobody can show us a planet where we work without patents, so we don't know what it would be like without the system).

Second, Mike qualifies it as a good example of showing "regulatory capture". It's a bullshit claim, because almost any regulated industry by nature has it's representatives, lobbyists, and the like. That isn't anything like regulatory capture. It's the way a democratic system works. The companies and industries don't get to vote in the elections, do they?

There is no grand coalition here, only both sides understanding what needs to be done and moving forward with something that is obvious enough to all concerned.

He attempts to paint the politicians as beholden to the special interest groups, but in reality they are just clearly understanding the needs of industry. Trying to imply that everything is done because one guy worked on Pelosi's fund raising is crap, because Pelosi doesn't have that much power anymore anyway. He is attempting to raise the stink level where no stink exists.

He started with the conclusion, that much is clear. It's probably why it plays so well on Techdirt, because he is giving you guys the answer you want to hear, not the actual truth.

Oh for the anonymous below: You can use "facts" in many ways, and cherry picking details and only playing one part of a story can make everything you say true, but still not tell the truth. Just because he uses "facts" in his story doesn't mean he actually told you what happened, he just picked some dots and connected them to match the conclusion desired.

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has never been proven (because nobody can show us a planet where we work without patents, so we don't know what it would be like without the system

There was once such a planet - it was called World War 2. At least in the UK nobody bothered too much with patents when we were fighting for our lives.

Result

Jet Engine
Computer
Nuclear Technology

and many more - in short the biggest burst of innovation ever to hit the planet.

There are other example - eg the Italian Pharma Industry before 1979 or the comparison between aircraft development in the US and Europe during the period 1908-1917. They all show fewer patents=more innovation. So your calim there is no evidence is simply wrong. There is plenty and it backs our case.

If you don't believe us then why not suggest we do an experiment - create a patent free zone and see what happens. What are you scared of?

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Don't forget the Fashion Industry in the U.S. Without patents and without copyright we can all go into the store and find the new fashions which are developed, marketed, and sold year after year after year after year.

All without any patent or copyright protection.

One might also point out that this planet had no copyright or patents until the last few hundred years. The Bible, Greek tragedies, Shakespeare, the Koran, King Author, Most of Newton's work, Galliao's work... all done without patents or copyrights.

We have no reason to believe patents would have helped the development of technology at all in the past, and no reason to believe it helps today.

Can you even name one product that came to market *because* of a patent? One inventor that was able to produce a product because of patents that could not have without them? Just one?

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"Jay, to get to his conclusion, you first have to assume that there is nothing good about patents."

You don't have to assume anything, you can look at the massive amount of evidence and decide that there's very little good about the current state of the patent system and quite possibly patents in general.

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"Jay, to get to his conclusion, you first have to assume that there is nothing good about patents."

Ok... So what good has come out of patents? How much has patent law innovated when you have companies such as Intellectual Ventures using it to control the market, and make smaller businesses pay them? How is the free market really free when Microsoft lost against i4i and has to pay them for a very vague patent that they supposedly infringed upon? Where is your proof that the patent system has done *any* good for business in general?

" I know that is a popular version of the truth around here, but one that has never been proven (because nobody can show us a planet where we work without patents, so we don't know what it would be like without the system)."

Socratically (Yay, new word!) speaking, your argument seems to be deep in sophistry. There's been times that countries have gone without patent law and it's been proven that they innovated quite well. We also have individuals such as Michael Meurer and James Bessen who say patents discourage innovation.

" Mike qualifies it as a good example of showing "regulatory capture". It's a bullshit claim, because almost any regulated industry by nature has it's representatives, lobbyists, and the like. That isn't anything like regulatory capture. It's the way a democratic system works. The companies and industries don't get to vote in the elections, do they?"

AT&T has regulatory capture on the broadband market through duopoly with Comcast. The better option is competition. The democratic system does NOT work through regulatory capture. It comes with giving consumers a choice between your network/product/entertainment choices versus someone else. If they choose yours, keep doing what you're doing. If someone else's, improve your offering. Regulatory capture is anathema to progress. That is basic knowledge at this point.

Also, to refute your last point, AT&T is the largest provider of funds, to Democrats and Republicans to get legislation favorable to their duopoly, in the US. How the system works, they can donate a lot more than an individual and if it's true that Senators spend $3900 a day (Maplight.org) then they would be happy to get AT&T's $5000 contributions along with "donated" computers and equipment to staff.

"He attempts to paint the politicians as beholden to the special interest groups, but in reality they are just clearly understanding the needs of industry. "

False. The needs of the small business owners is a less cluttered system where they can thrive instead of being bullied by the likes of IV. If it's better to sue than to innovate, as Apple is doing to Samsung, then there is a problem here. The system is bad. As it stands, he's showing the flaws.

"He is attempting to raise the stink level where no stink exists."

Where, the lobbying which pays for her? Why don't we look at that for a second? Link. Okay, here's Opensecrets. It displays all the numbers for lobbying power. And every year, as more and more companies lobby to Congress for time, lobbying power and expenditure has increased, even in a recession. So far, the number of lobbyists is almost equal. So the stink raised for lobbying? It seems to be a valid point so far. And in all this, I've yet to hear about consumer concerns. If anything consumers get form letters.

"It's probably why it plays so well on Techdirt, because he is giving you guys the answer you want to hear, not the actual truth."

So what is the truth? That lobbyists aren't allowing public concerns in Congress? That somehow, all of the data is wrong? What exactly are you trying to implicate by saying people aren't getting it, when there's a mountain of evidence against:

A) Patent law being "Good"
B) Lobbyists control the vote
C) The public is being screwed no matter what?

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As always, if you start with your conclusion, you can almost always write your way back to the intro and make it look credible. But the piece is pretty one sided, don't you think?

Welcome to the Internet age. The press was always biased; it's just now we know about it. Rather than trying to hide behind the paper shield of "objectivity", the new forms of journalism are up front about their opinions. The problem of course is that you have to actually think for yourself instead of lapping up what The Media regurgitates at you. And in case the point is not clear, just because someone is expressing an opinion, it doesn't mean their facts are incorrect. If you have a problem with the facts, then attack the facts.

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Yeah! It's not like he has facts and quotes and information and research to back up his claims! He just pulled them out of thin air to grind his imaginary axe!

Why would he do such a thing? To make it easier for you to hand-wave his claims away because you are incapable of making real arguments, of course. He feels bad for you, so he gave you an easy ad hominem to spout.

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I agree
It's all about politics and big government helping big buiness
In the case the banks. A high powered law firm with ties to the democratic party is helping a little guy. Yes that hurts the republicans supporters on the banking world. But this seems rather far fetched. Befor Datatreasury technology check archiving cost were over 1 dollar per check. With this technology, Datatreasury asked for 1-3 cents per check
The banks want it for free. Bank lobbies now are negotiating for .005 per check. This is a patent issue. Not a participant issue
It is a pate

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Do you have any better options? Wyden seems to be one drop of sanity (and maybe honesty) in the barren lands of the US politics. And with this damned bipartisanship system tat rules new entrants I'd say the Americans are pretty much screwed unless they go Arab/Spanish/[insert public manifestations here] style.

I think that I am going to get my 'I told you so' ready for all the people and companies that support more patents once they start getting sued for patent infringement because the system they pushed for is flooded with sketchy patents

Everyone in DC /is/ corrupt.

There's enough money floating around to corrupt literally everyone, and HAS. They also of course thrive on bureaucracy and special exceptions so the problem is utterly intractable. -- That's why my solutions don't bother with "reform" or half measures. We need to clean out the whole Establishment and the cushy nest that the parasites have made there: make Washington DC a national park and decree another place for the central gov't (by having some child toss a dart at a scrambled map! idea from Michael Feldman of NPR's What Do You Know show), and make it ONLY for gov't employees or "natural" persons not representing corporations. Let the people in Congress live in barracks like the military, make it a burden and not a privilege to be in Congress. And keep moving DC every twenty years so that the parasites don't fully entrench. -- Nutty? That's they said about George Washington! You can't reform within a system, just never happens; tyrants are not reasonable.

Re: Re: Everyone in DC /is/ corrupt.

Maybe you can explain it then. It sounds like he's saying we need to fix DC's geographic location to fix the problems inherent in the system but that really does not make any sense at all. I mean I like the bits that do make sense, "make it ONLY for gov't employees or "natural" persons not representing corporations" and "make it a burden and not a privilege to be in Congress," but moving it around to different places? What's that going to do other than be a huge added expense for the taxpayers and government employees that aren't elected? What persistent issue would changing the geographic location actually solve?

Re: Re: Re: Everyone in DC /is/ corrupt.

I think it is all about the disruption to the process that DC has become. You make it so disruptive and so unpleasant that only those who actually care about the state of the nation would be willing to put up with it.

Re: Re: Re: Everyone in DC /is/ corrupt.

Re: Everyone in DC /is/ corrupt.

Another problem is that the politicians writing laws on everything out there aren't expert. In that case, sweet talking, which happens when someone offers to help you get re-elected by pouring some cash over you, can sound awfully accurate.

Politicians are also attacked for almost anything they do.. if anything goes wrong (which is very possible because of the interdependency of so many players and factors) or takes too long to pan out (ie, short v. long term strategizing). One major thing that might go wrong is that the economy will hurt or that there will be correlations with someone out there (say a foreigner) gaining just as it appears we are losing. If you took an active position, many will blame you regardless of the logic if enough money pushes that other view.

Money does have a corrupting influence (including the fear of having loads of it and lies be pushed against you come election time), but it isn't the totality of the problem.

Re: Re: Everyone in DC /is/ corrupt.

..and in terms of influence ("sweet talk"), money speaks. Many people, especially over subjects where you lack expertise, will likely trust the judgement of a person that gets things done or appears to (eg, makes lots of money) over what a common nobody might say or even a person who has a name but doesn't appear to put that action into being able to make lots of money (and employ, etc).

More Than IP Reform

More than the IP laws need reformation. The whole concept of a corporation needs reform. A corporation is a thing, not a person. It should not be able to participate the the political process. No contributions to candidates, no hiring of lobbyists. If a corporation needs political representation, its shareholders can do that themselves.

Oh, did I mentioned that no corporation should be able to own another, either directly through stock or indirectly through some financial instrument like derivatives. Only people can own a corporation, who can do their own political campaigning, personally.

Re: More Than IP Reform

You can put all the restrictions around getting money to congress that you want, but like water flowing through a sponge it will find it's way there. The government simply has too much power such that it is still worth pushing millions (billions?) of dollars there.

These contribution laws are like the contraband screening of a prison, except these are designed by the prisoners.

Re: Re: More Than IP Reform

So we should just give up without a fight? Besides, I not restricting all big money contributions, just some of it. For example, Microsoft should not be able to make contributions but Bill Gates can. Only people should be participating in politics.

I hope more people get involved in the political process

The article is a great look at how competing special interests influence Washington priorities. I've said before on Techdirt that complaining about IP isn't going to get you very far. It's not a hot button list for voters. So if you want laws changed you either need to turn it into a hot button (which means pushing it ahead of all the other things voters care about) or you need to change the lobbying process and campaign funding.

I hope articles like this bring more members of Gen X and Gen Y in political activism. If you want to have as much influence as the Tea Partiers, you are going to have to get organized in a significant way. Talking music piracy isn't going to do it. Campaigning on lower drug costs, DNA ownership, and GMO issues in food are better issues to energize voters (not that the voters themselves will be able to do much alone; corporate money is what still matters most). Form your own lobbying organization and start paying politicians yourselves to back the laws you want.

Re: I hope more people get involved in the political process

Want to see politicians changes the rules quickly, lets write some laws ourselves and put people who will enact those laws in congress then you will see a lot of people trying to change the system, because the people can't have any real power can they?

The person who wrote the article is clearly a nazi and a fascist as well as displaying common signs of being a pedophile and a terrorist. A terror-nazi if you will.

Of course it is mike's job to put his full support against someone who is so hell-bent on destroying freedom and children, why should I have to read fifteen paragraphs of pedophillic nazi tripe when I can just call mike filthy names in the comment section instead?

maybe the best thing that would happen would be to see both dems and reps lose out to new political parties or indies who say that:
1.we wont take money lobbying
2.we are for the people and willnot take corp money
3.we will limit all donation to ?? $1000

otherwise we all will vote for the same two asshole parties and the cycle of broken washington and broken patents continues

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Speaking of "other" political parties: This new so-called "Super Congress" pulls members of Republicans and Democrats to fill its seats. What happens if one (or, hopefully both!) of those parties aren't a major player in congress?

It's like the lawmakers have forgotten that we don't have to be a two party government.

New Idea

Anyone want to join the SRUPBRTWR? The Society to Replace Unethical Politicians by Replacing Them With Robots? Robots couldn't do a worse job than the idiots in the capitol are...With the obvious exception of people like Bernie Sanders and others that Mike has praised, I can't find any reason that robots would be worse for American than those currently in power...

If people write their own laws this takes care of lobbying since the lobby will need to happen on a larger scale.

People let those clowns hijack the system and people may not realize that they too can write laws and they have the power to put people there to enact those laws and it doesn't matter who they put there as long as that person gets a support group that can assist him/her on doing the job, it also can solve the problem of root rot by not letting any one person stay in congress more then one cycle.

How are lobbyists going to lobby the entire population for little special interests? Will they feel comfortable approaching a new representative that they never dealt with before and bribing him or offering things without knowing if he will tell everybody or not?

You the people got the power, you got the means to organize, now people just need to have the will to act to accomplish change, real change, not the empty promises of politicians.

Don't let them write the law for you, go there and write your own laws and put to a public vote to gather people around.

Those that have enough votes can be enacted those that don't will never get enough people to put somebody there to be voted on.

Politicians are supposed to be the people's socket puppets, not the corporations, not the little special interests, but the whole of society.

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"Politicians are supposed to be the people's socket puppets, not the corporations, not the little special interests, but the whole of society."

Hahahahah. You don't get it do you? Politicians never were sock puppets for the "people" (a rather manipulative term which the word in reality is actually talking about the wealthy few not the working classes like us) but rather for their own class interests which are the wealthy few (the corporations) which has always been all along...have you people realized that yet?

Most people forget the system we're living under which Capitalism and what is designed for and who benefits from it....

Patent Reform

The article is right on . When our law makers congress and senators make laws they should try to make laws that are constitutional . We all know very well section 18 is unconstitutional . We all know that Chuck Schumer got paid to inset it , yet our politicians are all a gang of thieves and should be prosecuted as their children will be when our children our making toys for the Chinese . One of the only remaing industries if not the last has been sold down the river as every industry in the USA . We will see a depression soon. I remember when they sold out the Textile Industry starting with NAFTA then the Chinese etc , we are going to be a technological country . Guess what we are going to have an empty bag after they sell out the Intelecctual property component in this country . Besides section 18 first to file which has been ruled on as unconstitutional recently is the body of the bill . ALL YOU POLITICIANS that are voting this bill in deserve to be executed as that is what you have done to this country . The word is greedy stupid assholes ,

giveaway for banks

"patent reform"

Just because they call it “reform” doesn’t mean it is.

The patent bill is nothing less than another monumental federal giveaway for banks, huge multinationals, and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated the bill will help them steal our inventions. Who are the supporters of this bill working for??

Patent reform is a fraud on America. This bill will not do what they claim it will. What it will do is help large multinational corporations maintain their monopolies by robbing and killing their small entity and startup competitors (so it will do exactly what the large multinationals paid for) and with them the jobs they would have created. Yet small entities create the lion's share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” This bill is a wholesale slaughter of US jobs. Those wishing to help in the fight to defeat this bill should contact us as below.

Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors.

Section 18

When the big banks that have caused the worst economic recession since the Great Depression because of their corrupt practices, and have lost every case in the Federal Courts trying to overturn U.S. Patents that don't suit their purposes can control the U.S. congress because of their election donations, we ARE in trouble. And, it's not just the Bush years famous for their giveaways to the super rich. It's going on right now in the Obama administration. Now, that's a perversion of power leading to the weakening of our democracy, heading for an autocracy of MONEY and to hell with the people struggling to pay for their housing and feeding their children .